Nonalcoholic fatty liver disease (NAFLD) is a significant risk factor for the development of hepatic insulin resistance and type 2 diabetes and is also linked to the development of other serious liver disease states including steatohepatitis, cirrhosis, and hepatic carcinoma. NAFLD is recognized as a significant health problem in the VA population. Our previous results show that mitochondrial function is linked to the development of NAFLD. Unfortunately, the mechanism(s) that govern hepatic mitochondrial function and thus alter susceptibility for hepatic steatosis remain largely unknown. Peroxisome proliferator-activated gamma co-activator alpha (PGC-1?) co-activates nuclear transcriptional factors resulting in increased mitochondrial biogenesis. Both PGC-1? and mitochondrial function are suppressed in obesity. In contrast, we have shown that in vivo liver-specific PGC-1? overexpression (o/e) increases mitochondrial function and reduces hepatic lipid accumulation. But these results may not be solely attributable to increased mitochondrial biogenesis. Recent data shows that maintenance of high quality mitochondria is also dependent on the turnover and degradation of low functioning or damaged mitochondria in the lysosome by a process termed mitophagy (i.e. autophagy of mitochondria). To that end we found that PGC-1? overexpression also increased markers of autophagy, a link that has never before been examined. This proposal will test the primary hypothesis that PGC- 1? plays a primary role in mediating a coordinated co-activation of mitochondrial biogenesis and mitophagy that is necessary for maintaining mitochondrial function and preventing and treating NAFLD. Rodent models that possess defects in mitochondrial biogenesis or mitophagy due to specific genetic alterations will be used to test the importance of the respective pathways. We will also use molecular gain of function therapy (overexpression of PGC-1?) and exercise training to modulate pathways, in addition to performing in-vitro primary hepatocyte studies to isolate hepatic specific mechanism(s) and examine acute molecular changes that underlie whole body results. The specific aims will: 1) Determine if impaired capacity for mitochondrial biogenesis and mitophagy increases susceptibility for hepatic steatosis and insulin resistance due to reduced mitochondrial function, and 2). Test if increased mitophagy and mitochondrial function are necessary for treatment of hepatic steatosis and insulin resistance.